The New Jersey legislature unanimously approved a bill to regulate sports betting in the state and sent it to Governor Phil Murphy for his signature.
Sports betting could begin at Monmouth Park Racetrack and in Atlantic City almost immediately after the governor signs the bill, however, Murphy has not promised to move quickly on them. Murphy is embroiled in a dispute with the legislature on an overall budget that is due at the end of June, and a shutdown of state services has been threatened if the legislature balks.
Murphy has said he supports sports betting, but has not said if he will sign this specific bill and has promised his office will thoroughly review them before he makes a decision. The state’s Senate and Assembly passed identical bills.
New Jersey has been scrambling to get sports betting legislation in place since it won its court challenge to the federal Professional and Amateur Sports Protection Act last month. The U.S. Supreme Court struck down the 1992 law, which banned sports betting in all but four states.
The state’s challenge actually revolved around allowing a self-regulated form of sports betting, but since the high court completely struck down PASPA, the legislature has been moving to get a regulatory framework in pace before sports betting could begin in the state.
The delay, however, allowed Delaware—which was partially exempted for PASPA—to begin full sports wagering at its racetrack casinos before any operations could begin in New Jersey.
The New Jersey bill allows betting on all professional sports, but it bans betting on college games that take place in New Jersey or on college teams from New Jersey. The bill also bans betting on high school games and on eSports leagues.
The bill allows sports betting at the state’s three racetracks, Monmouth Park, the Meadowlands and Freehold Raceway. The bill also contains a provision for former racetracks should they re-open off-track betting, which could include the closed Atlantic City racecourse and the former Garden State Park racetrack in Cherry Hill.
Atlantic City casinos would also be allowed sports books and the Borgata hotel casino has said it plans to begin taking bets as soon as the governor signs the bill. The casino plans to build a sports book facility, but would begin taking bets at its current race book.
Other casinos already announcing plans for sports books include, Resorts, Golden Nugget and the soon-to-open Ocean Resort casino.
However, Golden Nugget’s plans for sports wagering could have hit a snag. The state’s sports betting bill includes a caveat that would block casinos or executives who own professional sports teams from offering sports betting.
Golden Nugget owner Tilman Fertitta currently owns the NBA’s Houston Rockets. The bill would allow the Golden Nugget—which has already announced a sports betting partnership with Churchill Downs—to move forward and allow Fertitta to sell the team within a year. If he did not, he would forfeit his sports-betting license, and all the money he made on sports betting during that time would have to be repaid to the state, according to an analysis by the Press of Atlantic City.
The provision would not affect other casinos that have issues with sports ownership, however. For example, Borgata owner MGM owns the WNBA’s Las Vegas Aces, but under the bill, MGM would be approved because the team generates less than 1 percent of its total annual revenue, according to the Press.
Also, Joshua Harris, who owns the Philadelphia 76ers and the New Jersey Devils, would not lose his license as he owns less than 10 percent of a casino or gambling company to participate in sports betting. Harris’ Apollo Global Management owns a small percentage of Caesars Entertainment, which operates three Atlantic City casinos.
State Senate President Steve Sweeney, a principal sponsor of the bills, told the paper that the provision is designed to prevent anyone “from controlling both ends of the bet—owning the team and the company taking the bet. That’s something we’re just not comfortable with,” Sweeney said.
There have also been issues raised that the soon-to-open Hard Rock casino on Atlantic City’s Boardwalk may face some sports betting restrictions under its stadium naming deal with the NFL in Miami. Still, no details have emerged on what, if any restrictions are in place and Hard Rock is also expected to offer a sports book.
The bill would set a tax rate of 8.5 percent with an additional 1.25 percent payment from casinos to be used to fund marketing for Atlantic City. The 1.25 percent add-on fee applied at racetracks would be split among the host community and the county in which the track operates. Online betting, would be taxed at 13 percent and could begin 30 days after the bill goes into effect.
The online element was considered crucial to New Jersey lawmakers, who are trying to achieve the highest revenue for the state while also understanding the business models of sports book operations. By offering mobile sports betting lawmakers are hoping to make the illegal online sports books obsolete.
“You’re providing less of an incentive to customers to enter or migrate over from a black market to legal and regulated channels,” Daniel L. Wallach, a Florida attorney and sports betting expert, told the New York Times. “Convenience will always trump driving 20 or 30 miles.”
The bill contains no restrictions on betting college or professional sports but makes it illegal to bet on high school sports.
No Integrity Fee
The bill also represents a snub to the professional sports leagues, who lobbied for the state to include an “integrity fee” to be included as well as additional tools such as information sharing and real-time data controls to make sure betting is conducted honestly.
In committee hearings on the bill, Bryan Seeley, a former federal prosecutor who now serves as senior vice president and deputy general counsel for MLB, told lawmakers his office was created specifically due to the 1919 World Series betting scandal.
“Any law to authorize and regulate sports betting must put consumer safety and sports integrity first,” he said. “It must recognize that without our games and without a product that fans can trust, sports betting cannot exist.”
Also testifying was Dan Spillane, senior vice president and assistant general counsel for the NBA. Spillane said sports betting is a unique industry, “which builds its product entirely on another business (i.e., a sports league), imposes substantial risks on the other business, and requires the other business to spend more to protect itself, all without providing compensation or a voice in how the underlying product is used.”
However, the leagues were in a position of asking New Jersey for something after opposing the state’s efforts in court.
“You guys are in it to make money,” said Ralph Caputo, a Democratic Assemblyman and former Atlantic City casino executive. “This is hypocrisy. Nine years of fighting the state of New Jersey, and you come here? It’s disgraceful. Just a suggestion: You may want to write a check to the state of New Jersey for $9 million” (a reference to the cost New Jersey paid to fight the ban in court).
The bill does include a requirement that state regulators consult with the pro sports leagues and listen to suggestions.
No sports betting operation in the state, however, is as anxious to get started as Monmouth Park racetrack, which has been planning for a sports betting since New Jersey first began its fight to overturn PASPA. The track has partnered with William Hill and already constructed a sports bar as part of its planned sports book facility.
“We’ve hired close to 50 employees here, getting everybody trained up have some of our folks from Nevada here showing rules of the road and best practice,” Michael Grodsky, a spokesman with William Hill Race & Sports Book, told the Associated Press. “Always said we will be open as soon as responsibly possible.”
Dennis Drazen, spokesman for the track’s operators said that “of course” officials are disappointed that Delaware tracks launched sports betting before them, but said he still supports the legislature’s decision to wait until regulations are in place.
“Obviously, we’re still euphoric and extremely happy we won the Supreme Court case,” Drazin told the Asbury Park Press. “This decision was an historic win, but at the end of the day, we’re all in this together, and we all want to make sure everybody is on the same page and gets it right.”
William Hill has also reached an agreement to provide sports book operations for Ocean Resorts, the former Revel casino that will open on June 28.
In another development, daily fantasy sports operator DraftKings and Resorts casino in Atlantic City announced they will partner in offering sports betting at the casino.
“Everybody knows there’s a big opportunity out there,” Jason Robins, CEO of DraftKings told the AP. “It’s a new thing, so people are trying to see how they want to go about it, who they want to partner with. Anytime you’ve got a big market about to be created, there’s so much opportunity out there that everyone should benefit, as long as you do it the right way.”
DraftKings has been hinting that it would enter the New Jersey sports betting market for months. It recently opened offices in the state and has been marketing a coming sports betting product for several weeks.
The move also comes shortly after the company’s chief rival, FanDuel, was acquired by Paddy Power Betfair, which already has an online presence in New Jersey.
DraftKings plans web-based and mobile operations and will offer numerous in-game betting opportunities in addition to more traditional bets on the outcome of games, the company said. Robins said his company is best positioned to succeed in the new market and is “ready to go” as soon as it gets the green light from New Jersey regulators.
“We have a well-known brand that’s very closely identified with winning money on sports,” he said.
